What Happened?
Shares of multinational media and entertainment corporation Paramount (NASDAQ:PSKY) fell 4.3% in the afternoon session after Warner Bros.
Discovery's board of directors formally rejected the company's unsolicited takeover offer, and a key financial backer pulled out of the deal. The Warner Bros. board unanimously urged its shareholders to reject Paramount's $30 per share all-cash bid, recommending a rival offer from Netflix instead. In a statement, the board called Paramount's offer "inadequate, with significant risks and costs imposed on our shareholders."
Adding to the pressure on Paramount, Affinity Partners, an investment firm that had planned to help finance the deal, announced it was withdrawing its support.
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What Is The Market Telling Us
Paramount’s shares are very volatile and have had 21 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 2.4% on the news that several analysts issued “Sell” ratings amid concerns about the company's valuation following its hostile bid for Warner Bros. Discovery.
The ratings followed Paramount's move to acquire Warner Bros. Discovery for $30 per share in cash, countering a previously announced deal between Warner Bros. and Netflix. Analysts expressed wariness about Paramount's financial position. For instance, Morgan Stanley noted the company's nearly $30 billion enterprise value seemed excessive and was likely inflated by speculation around the deal. The firm also flagged Paramount's $15.5 billion in debt and a negative diluted earnings per share over the previous year. The stock's decline reflected these valuation worries tied to the company's standalone prospects and the potential acquisition.
Paramount is up 25% since the beginning of the year, but at $13.23 per share, it is still trading 33% below its 52-week high of $19.73 from September 2025. Investors who bought $1,000 worth of Paramount’s shares 5 years ago would now be looking at an investment worth $365.33.
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